Ask Us Anything: Outsourcing expert Josh Walther explains when and how to start looking at scaling

This month we asked outsourcing expert Josh Walther when and how to start looking at options to outsource.

We sent three questions to Walther, we hope his answers help you find the right outsourcing solutions for your business.

1. When should I consider looking into outsourcing for my business, and how do I know what parts of my business are best kept in-house?

Businesses typically start thinking about offshoring/outsourcing for a couple of reasons:

• Scaling their business. But can’t afford to grow at the pace/scale they want with more costly onshore resourcing;
• Cost reduction offshoring to a destination like the Philippines (which is the #1 choice for Australian businesses – I’ll explain why below) will typically offer cost savings of ~65-70% vs hiring the same talent onshore in Australia. When you think about the cost of roles and hiring in Australia, plus all the on-costs involved, that saving can add up very quickly and free up capital to invest in growing the business; or
• Access to top quality, global talent. The talent pool in the Philippines for university educated, outstanding English-speaking talent means you can access an incredibly wide range of skills/role types. Outsourcing is NOT just about customer service anymore, with roles ranging across IT, finance/accounting, sales and service, marketing and more. If you can do the role working remotely in Australia, you can probably do it offshore.

Plus outsourcing is not just for the ‘big end of town’. There are different outsourcing models to support different businesses and different needs, ranging from the traditional ‘outsourcing’ model that started with the big telcos/banks (“can you run my customer service for me?”) to more modern ‘staff augmentation/offshoring partner’ models (“I need some offshore resources but I want them to work as if they were a part of my business, under my management control and using my processes and systems – they just happen to work in Manila!”).

In terms of what parts of your business to keep in-house, it depends. I’ll answer this one from the perspective of the staff augmentation/offshoring partner model I mentioned above, rather than traditional outsourcing. 

Traditional outsourcing meant that a separate company – your outsourcing vendor – was accountable for all the processes and outcomes that were outsourced (e.g. customer service). They picked the team, they managed the processes, and they interacted more like a vendor providing a service. These teams couldn’t really be enmeshed in the core operations of the business and often utilised different software, tools and external management.

An offshoring partner approach, though, typically means that you get the final say on the team that will be working for you, and they work directly for your management, and they utilise your processes, systems and tools. It’s like they’re a normal member of your team, they just happen to be working overseas. This means you can offshore a much broader range of roles, as they should operate like a core part of your business.

2. How do I start finding an external partner and how do I start briefing them on my business to get started on what I require?

Most importantly, you need to find a partner you can trust. They will be your partner on the ground offshore – running recruitment, helping onboard your team, supplying and supporting tech and infrastructure, office space if you need it, driving team engagement, retention and L&D, etc. You want to find someone with ‘boots on the ground’ both in Australia and offshore, who has plenty of experience in the industry and/or role areas you want to offshore, and who has the type of capabilities/infrastructure important to you (e.g. think about data security, facilities, health insurance/benefits for your team members, payroll, etc). If something does go wrong, they’ll be the ones to sort it out for you.

Also, caveat emptor! Buyer beware. Just like anything in life, if it sounds too cheap to be true, it probably is. You want to ensure that your offshore partner is a genuine ‘employer of choice’ (look for a Great Place to Work Certification, check out their staff engagement and retention rates, chat with some of their existing clients, make sure they have best in class L&D capability and Tier 1 tech, security and building infrastructure).

There are a few helpful steps to think about when getting started with your offshore partner:

• Have a think about the roles / functions you are thinking of offshoring. Ultimately your offshoring partner will need to recruit the right talent for you, so they’ll help make sure you have a good position description.;
• Do you want your offshore team to work from an office, work from home or use a hybrid setup? 
• For the roles/functions you want to offshore: are they established roles (e.g. existing processes and internal knowledge) or new roles (e.g. starting new functions/new areas)?  This will influence your onboarding and training approach.

3. How can you trust a third party?

There are a few things you can do to ‘de-risk’ your offshoring or outsourcing journey and set you and your new offshore team up for success:

• Understand the recruitment process in detail – including their background check and screening processes, verifying previous employment, and who has the final say in picking your team (it should be you!).
• Track record.  Look for providers with long-standing clients who grow their offshore teams over time. Look for well-known brands that you recognise and that you know would be very picky in choosing their offshore provider as well!
• Data security. Make sure you understand the tech infrastructure and security (physical, technology, data, etc) capabilities of your partner.
• Employee salary and benefits. Watch out for providers that offer a blended $X per hour for team members. Ideally partner with someone who offers full transparency on exactly what your team member will be paid (salary, benefits, insurance, leave, etc), plus their management fee as separate line items.
• Physical location. Look for partners with Tier 1 buildings in Tier 1 locations. They will be able to access the largest and best educated/most experienced talent pool for you. Watch out for providers only operating out of regional areas/non-capital city areas as they may not be able to support your more complex hiring needs as well.
• Get over there yourself. Visiting somewhere like the Philippines is incredibly low-cost from Australia and the value of being on site to see your team periodically is invaluable. It allows you to build an even stronger bond with the team and support cultural alignment, as well as check in on the on-the-ground support from your partner.